This week, lobbyists and entrepreneurs from the emerging legal cannabis sector descended on the D.C. area to pitch marijuana as “the next great American industry” to policymakers and investors alike. Treating canna-businesses like other entrepreneurial pursuits is largely what Colorado and Washington State have done with their recreational cannabis programs, achieving safe and legal access for users while creating generous sources of new tax revenue by empowering for-profit businesses to lead the industry.
While visiting advocates will tout the legal and financial accomplishments of these policies, not everything in the legal marijuana economy is rosy — racial bias in industry leadership and ecologically wasteful farming methods foretell the future pitfalls of selling pot for a profit.
Cannabis proponents and media outlets frequently reduce the question of legalization to a theoretical choice between the economic gains conferred by commercial cannabis versus maintaining an ineffective and costly prohibition. While this is a simple way to sell legalization, it omits meaningful consideration of other important social concerns and how they intersect with a legal cannabis trade. Classifying cannabis as a for-profit enterprise does not adequately protect social interests of economic opportunity, environmental sustainability and public health. Lawmakers now have a crucial opportunity during legal marijuana’s infancy to prevent foreseeable problems by creating legal space for nonprofit alternatives.
One of those concerns is equal access to economic opportunity. Currently, the recreational cannabis markets of Colorado and Washington impose steep fees and taxes on canna-businesses to attempt to control both the trade and its social effects. These fees and taxes are respectively intended to compel businesses to purvey and consumers to use cannabis responsibly, but the practical effects of each are far less clear. High fees for business licenses and other state-mandated expenses like specialized grow facilities add up to hundreds of thousands of dollars needed just to open what are essentially small farm businesses, in themselves relatively inexpensive to operate. Colorado charges an annual fee of $10,800 for cannabis cultivators to produce up to 10,200 plants; the annual fee for an organic greenhouse with a comparable amount of space is merely $400. Consequently, blacks and Latinos, the very groups most disproportionately prosecuted under anti-marijuana laws, are far less likely than their white counterparts to have the financial ability to surmount the regulatory costs to starting a canna-business of their own. By imposing hefty costs to limit the pool of applicants for cannabis licenses, current legalization regimes are excluding all but the wealthiest entrepreneurs from joining the market, keeping those most likely to have been negatively impacted by the plant’s prohibition from attaining new opportunities for livelihood in this growing sector.
The tax revenue to be gained by legalization is often highlighted, but not fully explained. Recreational cannabis markets are essentially subject to a “sin tax,” meaning the tax is set high enough to make illegal resale (to minors, for example) unprofitable and “overuse” by consumers expensive. Justifying sin taxes should entail evaluating how the trade and use of certain commodities results in public costs that taxpayers end up subsidizing, such as excessive alcohol consumption. The legal marijuana industry has only recently gained the platform to begin refuting the dubious claims of marijuana’s links to crime and substance abuse, but legalization laws for these markets were written primarily to address those concerns, using the policy tools of tax and law enforcement to shape social behavior around cannabis.
Rising prices for consumers, escalating costs for small businesses and opportunities reserved for the highest bidders are unfortunately becoming the hallmarks of the for-profit cannabis economy. Another is environmental degradation, as marijuana’s stigmatized status justified regulations which require cannabis to be grown indoors, a practice which produces an enormous carbon footprint and seems especially egregious as natural resources are increasingly constrained by the pressures of climate change.
Nonprofit models for cultivating and vending marijuana could spread the economic benefits of legalization far more widely, while creating structures outside of law enforcement which hold sellers and growers accountable for their social and environmental practices. As Jonathan Caulkins adeptly explains, “Placing the cannabis industry in the hands of nonprofits committed to fostering public health would rejigger the incentive structure. For-profit corporations seek to grow sales and, as with alcohol and tobacco, the greatest revenues come from the most vulnerable populations. … Nonprofits, by design, operate under different prerogatives. They are not inherently interested in expanding sales or streamlining production, since their mission is to serve the public interest, not to maximize shareholders’ profits.”
But why limit their mandate solely to public health? The missions of these nonprofits, aside from growing pot, can be defined by state legislatures or city councils. They could educate their workforces and customers in methods of sustainable agriculture, easily cross-applied to other crops. They could also be required to extend educational or employment opportunities to minority groups who’ve unfairly shouldered the cost of non-violent drug convictions in their families and communities.
Take the town of North Bonneville, Wash. Last month, it opened the first nonprofit pot shop in the nation, after their city council incorporated the store as a public development authority that will grant its excess revenue beyond operating costs to worthy local projects, the first of which is a public playground. If federal or state legislators aren’t yet willing to seriously consider the social benefits of a nonprofit model for cannabis, elected officials in counties and towns should weigh whether following in North Bonneville’s progressive footsteps could better serve long-term community interests rather than allowing for-profits to hog all the potential rewards of legal marijuana.